Late Night Talk

The rand is toast, Turkish flu has infected emerging markets, Trump seems to mindlessly rock the economic boat around the world and the JSE is still going nowhere.

The Money Show’s Bruce Whitfield asked Galileo Capital Personal Financial Advisor Warren Ingram a pertinent question:

How can investors, big and small, safely navigate this hectic time?

Ingram gave the following advice:

Change the game.

Instead of getting caught up in the current state of affairs where you try to anticipate how Trump, China and Turkey are going to affect markets and then decide what you should do, focus on your objectives first.

It is impossible to anticipate what politicians are going to do, and then to foresee how investors are going to react.

It is much easier to determine your investment game plan based on your situation.

Consider how long you need to invest, how much you can tolerate losing in a severe market crash and your ability to keep investing in difficult times.

Once you know this, you can develop a game plan for your investments that helps you make tricky financial decisions more easily.

Everyone needs some money in shares.

(Read: How to buy your first share - even if you only have R50, or less)

Investors are getting despondent with the lack of returns from the JSE.

Some are starting to lose hope and are considering guaranteed products that offer a guaranteed growth rate.

Sadly the growth rates are the same as a money market and will not protect investors against inflation.

All investors need a minimum of 35% to 75% invested in shares, dependent on age, tolerance for risk and timeframe for investing.

Offshore?

The rand weakened dramatically again, and many investors are panicked about sending money offshore.

Have a clear strategy for how much to invest overseas – 25% at a minimum and up to 75% for very wealthy families who will leave money to the third generation.

Have a target level for the rand before making your offshore decision – I think R13.50 is a fair level to buy offshore investments.

Cash is not king.

We should all have a limited amount of cash investments for emergencies and as a reserve to act as a shock absorber in our portfolios when markets collapse.

However, we should not have too much cash.

For any investor, a long-term allocation of more than 35% to cash is too much unless you are Warren Buffett.

For more detail; listen to the interview in the audio below.

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